Apple 2.0

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Trader gets 30 months for moving decimal point in Apple order

November 20, 2013: 6:59 AM ET

The client ordered 1,625 shares of Apple, the broker bought 1.6 million.

406641090425FORTUNE -- Last fall, David Miller thought he'd found a sure-fire way to dig himself out of debt.

The Rochdale Securities trader had watched Apple (AAPL) shares fall in the space of a month from above $700 to below $600. Earnings were due out Oct. 25, and Miller expected what analysts call a positive surprise.

He took a client's order for 1,625 shares of Apple, moved the decimal point three places, and bought 1.6 million shares -- a billion dollars worth -- using his employer's capital for collateral.

Unfortunately for Miller, and for Rochdale, Apple's surprise was the other kind. Earnings missed for the second quarter in a row and gross margin guidance disappointed Wall Street. Apple went down, not up.

On paper, Miller had just lost $30 million of someone else's money.

By the time the dust settled, Rochdale Securities had gone out of business, 40 people had lost their jobs and Miller was in federal court in Hartford, CT, pleading guilty to wire fraud charges that carried a possible sentence of 30 years in prison.

He got 30 months.

At Tuesday's sentencing hearing, according to the Hartford Courant's Edmund Mahoney, Miller gave a long and teary apology. "I don't deserve to be forgiven."

See also: Client orders 1,625 Apple shares, broker buys 1.6 million.

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Philip Elmer-Dewitt
Philip Elmer-DeWitt
Editor, Apple 2.0, Fortune

Philip Elmer-DeWitt has been following Apple since 1982, first for Time Magazine, and now on the Web for Fortune.com.

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